The big discount

The place down the street was a flip. A nice one. The couple who did it are wealthy from inherited money (paving, waste management) and live in a mansion across town.

They looked like winners, until this disaster. They bought the historic place for $2.6 million four years ago, plowed a million into it and hit the market in late 2023. The ask was a hair under $4 million.

Then the market lost its post-pandemic hormones. Then Trump came back. Then everything changed. After a year, the ask went to 3.8 million. The next summer came an offer for $3.5 million. They signed it back at $375 million, and struck out conditions (would you buy a 180-year-old house without an inspection?). The buyer walked.

It was just re-listed at $3.2 million. Local agents say it might go in the ‘high 2s’. The loss, given land transfer taxes, reno costs, commission and four years of ownership costs, could top $1.5 million. None of it tax-deductible.

“It’s starting to settle back to earth,” says a realtor buddy. “Vendors have stopped being stupid. It sure took long enough.”

You betcha. But the correction has now approached a level not seen since the early 1990s, when average prices fell by 32% following an historic, inflation-driven boom in the 1980s. This time it was Covid that totally messed with people’s heads. They thought Bunnypatch property values would rise endlessly and that nobody would ever go back to the office. Silly geese.

This time prices have shed about a fifth in the larger urban markets. Sales have stabilized at low levels. Secondary and smaller markets have seen a real improvement in affordability. Vancouver is wobbling between desire and terror. And the GTA has quietly gotten cheaper as sellers throw in the towel – especially on properties worth $2 million and above.

Last month, we’re told by HouseSigma, 78% of all homes changing hands in that market did so for less than the asking price. Just 19% sold for more. This compares with the FOMO days of 2022 when an astonishing 86% of sales were for more than the buyers listed at.

You remember that. Bully bids. Blind auctions. Multiple bidders. Offer nights. Moist young couples lined up for showings. Rock star realtors asking for $100,000 certified cheques stapled to any offer. No conditions. And the asking price was just a suggestion, with nine of ten properties going for more.

So the pendulum has swung back, but slowly. The questions is whether it has settled at equilibrium, or there’s more swing to come.

One clue might be in actual selling prices. Yes, almost 80% of buyers are getting properties for less than the seller wanted, but the margins are slim. HouseSigma’s data shows the median sale price for the entire market last month was 2.8% less than ask – a discount averaging $23,000. Among only those properties selling below ask, the final price was 3.7% lower (about $30,000).

Given the average price of $1.1 million for properties in this market, it’s essentially a piffle. Yes, thirty grand less mortgage debt is a good thing, but it’s not the stuff a market collapse is made of. One obvious conclusion is that sellers are starting to list their homes at a more realistic level. Buyers can still dicker down, but there’s no fire sale happening.

Second, these are July stats. When it comes to real estate sales, July sucks.

The data guys point out that last month ranked 11th in the last 24 Julys. The final price of homes sold in mid-summer between 2003 and 2013, for example, was below asking 78% to 89% of the time. So if anything, this tells us that if you want a deal, then go shopping when everyone is in shorts, BBQing and slightly inebriated.

Well, where from here?

Expect sideways for a few months. Canada and the US have (maybe) a trade deal now. Interest rates will stay stable for the rest of 2026. The US midterm elections in November could clip the wings of the American king. Our inflation is contained, job creation is up and economic growth has rebounded. Wages are growing faster than prices. Despite everything Trump has thrown at us nasty Canadians, we’re recession-free but still pissed.

In short, it was a correction. Not a crash. It took four years. It’s sputtering.

By the way, the more you ask for a property, the greater the market resistance. For homes priced above $2 million, the buyer discount buyers last month was 5.5%, or well over $100,000.

And for my flipper neighbour, justice.

About the picture: “Hello Garth, from sunny, smoke-free Vancouver,” writes Kathy. “Long time devotee of your blog, and appreciative beyond measure.  Here is my long departed Delilah.  Cute as a button, but heaven forbid the garbage collector tries to steal our stuff, or the postal delivery person comes up the driveway to kill us all.  Fierce beyond her 7 pounds and missed deeply.  Hope you have healed up without ongoing issues.  Keep up the great work so I can continue my daily addiction read.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/08/20/the-big-discount/